We're not making $$ but the Fed is...

The Fed is creating a conflict of interest between its own institutional best interests and the proper choices for monetary policy. That is the definition of a systemic risk. Bernanke needs to address this conflict. I want him on the record acknowledging the risks of what he has done and is about to double up on:

The Fed commits to all interested parties that it will act in all future periods consistent with its mandate for stable prices. Should circumstances arise that require a rapid tightening of monetary policy the Fed would act accordingly and ignore the consequences to its own financial position. Should this occur substantial and sustained losses would be incurred. The Fed accepts in advance the full consequences of its actions.

Of course we will never hear these words or anything close to it. That is why most people do not trust QE and believe it will end badly. For the record, the annual cost to the Fed assuming a Federal Funds rate rise at some point (keep in mind that we were at 5.5% just three years ago):

Annual loss at:
3.5% = $24b
4.5% = $56b
5.5% = $88b

For anyone interested in the entire article:

http://brucekrasting.blogspot.com/2010/10/bernankes-conflict-of-interest.html